The yield on the 10-year Treasury note briefly exceeded 3% on Friday, its first foray above the six-week threshold, as the data showed a sufficient economic slowdown to keep the Federal Reserve steady.  The yield on the ten-year treasury stock
TMUBMUSD10Y, + 0.53%
rose 3.4 basis points to 2.98%, after touching 3.00%, according to Tradeweb. The yield of the 2 year note
TMUBMUSD02Y, + 0.47%
rose 2.5 basis points to 2.782%, the highest since July 2008. The yield on 30-year bonds
TMUBMUSD30Y, + 0.53%
added 3.5 basis points to 3.366%. Bond prices move in the opposite direction of returns.
Investors supported a mixed set of economic data. Retail sales increased by 0.1% in August, to below 0.3% expected by economists interviewed by MarketWatch. Furthermore, import prices decreased by 0.6% in August. Investors may have to wait longer for domestic consumption to turn into stronger inflationary pressures.
On the other hand, there are many signs that the US economy has not lost steam. Industrial production increased by 0.4% in August, while the University of Michigan consumer confidence index rose to 100.8, the highest since March and the second highest since January 2004
"The data broadly supports our view that the Fed presses ahead and continues to raise interest rates by 25 basis points once a quarter between now and mid-next year, with the next increase coming later this month, "wrote Oliver Jones, an analyst with Capital Economics.
Adding upward momentum to Friday's returns, traders said hopes of reducing trade tensions between the US and China weakened demand for shelter assets like the US government newspaper after reports of this week some Trump administration officials were planning to propose a new round of talks with Beijing. But later Trump said that there is no urgent need to conclude a trade agreement with China.
Meanwhile, the analysis of J.P. Morgan shows that more companies are starting to highlight commercial risks in their revenue requests. The latest iteration of the Fed's Beige Book, a collection of anecdotes from companies across the country, shows that some companies have already anticipated their investment plans amid growing commercial uncertainty.
"Concerns about the trade war with China seem to have boosted safe haven flows in Treasuries, for example, which could plausibly happen again, but we doubt it would be enough to offset the upward pressure on monetary policy returns, in particular with the fiscal stimulus and the reduction of the Fed budget which still increase the supply in the background, "Jones said.
On the Monetary Policy Front, Chicago Fed President Charles Evans said that senior Fed officials around the consensus that the economic outlook was favorable.
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